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Bloomberg just had a headline . # Heavy oil scarcity to boost Canadian oil sands prices next year. #
Guessing pipeline completions will give takeaway access to supply US shortages in 2021?
So 2H 2021, once vaccinated people are going on holiday again. WTI might be $55 by then to encourage more production to keep up with demand.
Just nice to know what we would get. A couple of bidders in auction might deliver a reasonable price.
Why would AB do that hitmania?
Perhaps Enquest should also put itself up for sale and see what offers it gets. I think Cairn could swoop in for say £500m.
You might have something there squif. We can actually afford to do nothing. There does seem to be a lot of oil field sellers in the NS. It is a buyers market.
I really hope that Enquest can do another Magnus style deal with zero up front commitment. With so many companies trying to sell their assets they should be paying the buyers to take them of their hands :-).
Ron I agree with everything you have written. We've been through quite a journey this year and are standing strong thanks to quick and effective decisions made by the Management team.
I'm possibly miles off but you cannot ignore what's happening around us. Of course AB has a strong hand but there are other large shareholders and I'm sure he's aware that (say) 10 percent of a £1bn company is worth less than 5 percent of a company worth £3bn. I wasn't promoting anything hasty and our performance over 10 years suggests that our moves are measured anyway. Requirements and regulations mean impulsiveness is near to impossible (except maybe with hedging and that is relatively short term). The larger you are the better the moat and the past few years have turned the business upside down (shale, covid, ESG pressure) to the extent that smaller companies and those needing to raise finance will be at the back of the queue for essential financing going forward. You play the hand you're dealt and ours is a pretty good hand all things considered. To still be above water in these times is an achievement in itself.
My post was more about the changed landscape. I think we are constantly in talks because that is what the oil industry does and there has been more cyclonic events in the past few years than at any other time that aren't caused by a war. We're possibly due one of those soon too. Might as well go for four of a kind and leave the kicker as a 'black swan'.
I don't think there are that many companies interested in the NS for us to be outside any calculations or approaches. AB has been around long enough and has the necessary contacts and influence.
All market caps are low but it also means that some targets have never been cheaper. It works both ways and we don't have the bailiff knocking on the door.
Yes SA.....survival during this unprecedented period will be greatly rewarded...’ the worm can turn quickly’.....Enquest are well Positioned for the Brent recovery nx year!
I agree Mavrick. We should not be making any hasty and drastic decisions in this covid world where oil price and as a result the market cap are low.
50 dollar plus oil and Enq will be paying off larger chunks of debt every month.
I think oil price will be much higher but first we have to see the back of Covid and the Americans and Indians back to work and back to normal oil use.
Volume remains low and I think we should be reaching the bottom soon.
Interesting as always romaron....not sure AB will sell easily, as we know it’s he’s baby....not too mention he has a 55p average.....so he won’t sell on the cheap like PMO where forced too......better to do deals when your in a Position of strength, I feel at the mo better for Enquest To ‘stagger’ on, continue lowering our debt and improve our market cap, either way I’m a believer in AB and he’s ability to navigate this company forward successfully.
Excellent find Mavrick - in the article it says "Size matters in US shale because economies of scale, lower overheads, increased bargaining power with suppliers but also, crucially, greater access to debt markets." Many of the factors that affect shale apply to conventional too. To offset natural declines the producers in the NS need to drill new wells and find resources. Practically all of the smaller producers need to increase their debt or roll it over from a position of weakness. PMO look likely to have escaped but the shareholders have been heavily diluted. TLW have sold some family silver and seem safe for the moment. We are not under immediate threat but I don't think there's a queue of lenders waiting with their cheque books to finance us past bond maturities (3 years) and the RCF needs replacing. Not beyond our present capabilities but we are looking small in both production and reserves and today that isn't a good look. However, we are very attractive to companies looking to exit or go through the IPO route to divest. DEBT is boring and information from and about bond holders is held mainly by professionals who don't pass on their expertise to message boards. Most of what we can access here is pretty basic TBH. We can stagger on alone but I feel the next step is a merger.
Two immediately come to mind. Spirit and Neptune. I believe that a merger with either would give us a better credit rating relating to their backers who want out anyway. It would be a marriage of convenience but what is happening to shale needs to happen in the NS too imo.
Neptune were looking for an IPO by April 2020 and are backed by Carlyle Group and CVC partners who have deep pockets.
Spirit is owned by Centrica 69% and Bayerngas Norge's former shareholders (31%) who I believe want out also.
I think it might even be staggered and the mergers entered into, companies integrated and plans to either sell their holdings when the market cycle is better; possibly to whoever buys them.
It is beginning to get interesting. The professionals deal months and years ahead. They are already looking at a post-Covid world.
Interesting read:-
Shale Oil M&A Accelerates With Pioneer’s Move to Buy Parsley
https://www.bloomberg.com/news/articles/2020-10-20/pioneer-to-buy-parsley-for-4-5-billion-in-latest-shale-merger
Reported in the FT: "Nil-premium mergers would be pathway for US shale ...Industry too highly fragmented with too many managements, too much G & A, too much growth ambition & too little focus on shareholders.”
--Citibank
Over here in the NS we've only had one potential merger (Chrysaor/PMO) so like buses can we expect a couple more along shortly.
Is this still in operation FYR 9 April: "§ Directors and senior management have agreed an interim voluntary reduction in salary of 20%" ??